During yesterday’s College of Commissioners meeting, Poland’s National Reconstruction Plan (KPO) received a favorable opinion. This consensus followed negotiations led by a team appointed by the President of the European Commission, Ursula von der Leyen, together with representatives of the Polish government headed by Minister Waldemar Buda.
READ MORE: An official decision has already been made! The European Commission has approved Poland’s National Reconstruction Plan
National Reconstruction Plan
The discussions focused on how the KPO would be implemented rather than its overall content, which had already been settled in the summer of the previous year. The reform of Poland’s judiciary, especially the Supreme Court Disciplinary Chamber, introduced changes to disciplinary procedures and created pathways to resume proceedings for judges already sanctioned by the SN – Chamber of Professional Responsibility. The agreement rests on the presidential bill governing the Supreme Court, which addresses these topics, has passed the Sejm, and has been referred back to the Senate for consideration. The College of Commissioners’ positive verdict on the Polish KPO directly counters opposition claims that parliamentary changes were necessary to satisfy European expectations.
With the European Commission’s positive opinion in hand, Poland’s Financial Development Plan Agreement (FPA) will be reviewed by the Council of the European Union, specifically the finance ministers from all 27 member states, in mid-June. Once approved, project implementation can begin. Because only countries whose plans were approved by December 31, 2021 received advance payments of 13 percent of the total, Poland can request the first tranche after the year’s midpoint. Settlements under the KPO follow a semi-annual schedule. The government is expected to submit the request in early July; after the Commission’s verification period, and considering August as a holiday month for many EU institutions, the first payments under the KPO could arrive in September.
The total resources negotiated under the FPA amount to EUR 57 billion. Of this, nearly EUR 24 billion come as grants, with the remaining roughly EUR 33 billion available as favorable loans. So far, Poland has applied for the entire grant portion and only about EUR 11.5 billion of the loan portion, totaling EUR 35.5 billion. Local authorities have been the main beneficiaries of KPO funds, while loan utilization has been slower. This stance stands out, especially given the substantial investments required by large cities in environmental protection and other pressing projects, and the attractiveness of loan funding on favorable terms.
Where does the KPO money go?
It should be recalled that FPA funds are planned to be spent between 2022 and 2026, with the aim that about 70 percent be programmed by the end of 2022. Measurable outcomes include GDP per capita rising from the current level to 95 percent of the EU-27 average by 2030, when adjusted for purchasing power, an investment rate climbing from about 17 percent to 25 percent by 2030, and employment rising from roughly 68 percent to 77 percent among those aged 15 to 64. In the Brussels submission, EUR 35.5 billion was allocated to Poland, consisting of all grants plus EUR 11.5 billion in loans of EUR 33 billion. After currency conversion, this equates to approximately PLN 160 billion.
The funds are earmarked for five priority areas: green energy and reducing energy intensity – EUR 14.5 billion (about PLN 65 billion); green, smart mobility – EUR 7.5 billion (about PLN 33 billion); digital transformation – EUR 4.9 billion (about PLN 22 billion); resilience and competitiveness of the economy – EUR 4.7 billion (about PLN 21 billion); and the efficiency and accessibility of the health care system – EUR 4.6 billion (about PLN 21 billion).
The allocation splits roughly across sectors: public sector funds, including state programs, account for about 37.5 percent; local government resources exceed 31 percent; and private sector involvement also exceeds 31 percent of the totals so far committed. These shares could shift if more entities from all three sectors express interest in the loan portion of the KPO, as roughly EUR 21.5 billion remains to be distributed.